ECB maintains interest rates at 4.25% as per forecasts

Logo of European Central Bank

The European Central Bank (ECB) decided to hold key interest rates steady at its latest monetary policy meeting, reflecting the ongoing rise in some key components of the Eurozone’s general inflation, including service prices.

Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be maintained at 4.25%, 4.50% and 3.75%, respectively.

This followed a 25-basis-point (bp) hike in the ECB’s main lending rate at its policy meeting last June. However, today’s decision came in line with market expectations.

The central bank explained that the recently received data largely underpins the previous estimates of the Board of Governors in terms of medium-term inflation prospects.

Last May’s uptick in the Eurozone’s core inflation was due to non-cyclical factors, with most price indicators remaining stable or declining in June.

While profits have buffered the inflationary impact of high wage growth, ECB plans to hold steady to its current policy tightening stance as Eurozone inflation remains stubbornly above its 2% target and wage growth continues to fuel inflationary pressures.